Divest from fossil fuel investments

On January 16, 2014, in Latest News, by The Somerville Times

mayor_webBy Joseph A. Curtatone

(The opinions and views expressed in the commentaries of The Somerville Times belong solely to the authors of those commentaries and  do not reflect the views or opinions of The Somerville Times, its staff or publishers)

In my inaugural address, I called upon our community to set a citywide goal to reduce our net carbon emissions to zero by 2050. That’s an ambitious goal, but by setting the bar high, we will not be content to nip and tuck around the edges, but will fervently take on the challenge of climate change. Our children and their children deserve no less from us, and Somerville can make a difference. Cities are collectively responsible for over 70 percent of greenhouse gas emissions across the planet, according to the United Nations. We must do our part and do it the same way we approach every issue facing our city. We will study the facts and make prudent, patient investments today with an eye on tomorrow.

However, some of our investments today are part of the problem. We are funding the problem through our pension fund’s holdings in fossil fuel companies. So in my inaugural address, I also publicly supported the goal of the Somerville Retirement Board divesting from fossil fuel companies.

The city’s retirement board’s chief responsibility is to secure the highest rate or return possible for investments in our pension fund. In the case of fossil fuels, the moral imperative is so clear and unambiguous to warrant divestment, but this is not only a moral imperative. It’s sound financial policy, too.

There is a looming $20 trillion carbon bubble, according to a report by London School of Economics’ Grantham Research Institute on Climate Change and the Environment, in collaboration with nonprofit organization Carbon Tracker. That’s because fossil fuel reserves are overvalued, and at least two-thirds of the reserves must remain untapped underground to prevent climate change from increasing the global temperature by more than 2 degrees Celsius, a target agreed to by the United States and 113 other countries.

This means that these reserves are essentially unburnable and subsequently worthless, which will lead to incredible market losses by fossil fuel companies. Yet instead of taking this into account, the top 200 fossil fuel companies spent $647 billion in 2012 to find more fossil fuels. That’s equivalent to 1 percent of the global gross domestic product, a figure that if spent annually on climate change mitigation would stabilize greenhouse gases by 2050, according to a report by London School of Economics professor Sir Nicholas Stern. Spending billions on finding more fossil fuels when currently held reserves are likely to lose their value is a financial waste that increases the risk for investors such as the Somerville Retirement Board.

The red flag raised about the carbon bubble is supported by other financial institutions, including Standard and Poor’s, HSBC Holdings and Citi. A coalition of investors, politicians and scientists has gone so far as to warn the Bank of England that fossil fuel reserves held by companies invested in by the City of London are “subprime” assets. We remember what happened in 2008 with subprime mortgages. These fossil fuel companies are poised for a great fall, and our legal obligation to fully fund our pension system does not need to fall with them. Divesting from fossil fuels is not only the moral choice, it’s the financially responsible choice.

We are not alone in this fight. Seattle, San Francisco, Portland, Madison and Providence have already agreed to divest from fossil fuels. These cities’ investments in their pension funds are at less risk today because they’ve divested. And they have sent a message that they will not take ownership in the corporations who seek higher profits at the expense of our planet’s future.

Our community has already led the way on taking responsibility for our environment, from increasing recycling and installing solar panels on our schools, to green building incentives in the rezoning of Union Square and Boynton Yards, to energy-efficient LED lights for our streetlights, to making sure that the Green Line Extension and Assembly Square Orange Line station become a reality. We will continue to lead the way in 2014 through citywide Climate Change Mapping Sessions, detailing everything in our city that affects greenhouse gas emissions and identifying what we need to do to reduce these emissions and reach our net-zero goal by 2050.

Even with all that, we must start with what we’re doing right now to contribute to the problem. We are currently investing in the destruction of the planet. We need to divest from fossil fuel companies now.

 

7 Responses to “Divest from fossil fuel investments”

  1. Me says:

    Political policy should not have an effect on investment policy. If you are going to honestly have a discussion of the pensions, you should be talking about the unfunded liability, where due to mismanagement and outright lies the city is living well beyound its means, and leaving the bill for future generations.

  2. Ben W says:

    Way to go, Mayor! Proud to see this effort progressing here in Somerville in concert with other campaigns in other cities. Also, the Massachusetts State bill for pension fund divestment is currently sitting in the state house. Let’s push that forward too, folks!
    Call House Chairman Rep. Michlewitz at 617-722-2240 (or email him Aaron.M.Michlewitz@mahouse.gov) to advocate for the state bill to move forward! And check out the Somerville divestment campaign to join other local activists and concerned citizens in working for climate justice and action on climate change!
    https://www.facebook.com/DivestSomerville?fref=ts

  3. Jim says:

    Everyone’s behavior and lifestyle is a part of the problem. If people divested fossil fuels from their lifestyles, then the fossil fuel companies wouldn’t have a market for their products and they would eventually go away.

    Anyone who preaches divestment without divesting fossil fuels from their lifestyle is a hypocrite.

    Be the change you want to see in the world

  4. Jim,

    We can’t all be living by the campfire and riding bikes. Most of us have to heat our homes and drive to work.

    Until we get some free solar power and a global transit system which can pay for itself–I think this is it. Plus, I would love to see you and your advocates go up against the powerful Koch brothers and get them to go green. Keep us posted.

  5. Juliette Rooney-Varga says:

    As a mother, a citizen of Somerville, and a scientist, I couldn’t support this initiative more strongly. Our investments offer an opportunity to create the future we want, not one that borrows from our children. It will take many tools to create a sustainable, healthier, and greener future – I’m grateful to live in a city that is ready to move towards that better future.

  6. Stephen Moore, LEED AP says:

    Let me second the sentiments of my neighbors and fellow residents of Somerville in supporting this initiative strongly. Investments, be they pensions, retirement accounts, what automobile you purchase (and how often/far you drive it), what windows you have in your house, and the multitudes of little triumphs we can deploy both as a municipality as well as individually, are of utmost importance to the immediate future every bit as to the ones of our children and their children. Setting the pace is not as complicated as it tends to be talked about, but it does take the will of each of us….together. Proud to be a part of this progressive community and you can count on my support and assistance in whatever may be needed.

  7. auspiciousbunny says:

    Thanks for your editorial. I agree we should divest from all companies that engaged in fossil fuel extraction. These are unstable sources of energy and have caused massive human and environmental consequences, both around the world and in the U.S. I have family in West Virginia — and if you saw what the coal industry has done to their communities it would make you heartsick.

    So, I have retirement funds invested and I avoided energy companies that engage in non clean forms of energy – these include: uranium mining / nuclear energy (the Hudson River contains nuclear isotopes that have leaked from the Indian Point plant, there is a spike in cancers like multiple myeloma); mountaintop removal coal mining; natural gas extraction (water contamination in PA, production an enormous quantity of toxic wastewater no one knows what to do with); oil drilling (think that one is obvious.)

    I specifically reviewed my investment choices, down the granular details of each company included in each fund. This required some research. Also, I discussed with my adviser that I did not want to invest in mountaintop removal mining coal companies or other fossil fuel extraction. I told him I have family in WV and I have seen first hand how MTR mining has devastated the state. I don’t think Vanguard gets people like me very often. But I managed to put together an investment plan that includes no energy stocks. In the future, I will do some further research to see if I can find real clean energy innovation to invest in.

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